The country’s largest IT services provider, Tata Consultancy Services (TCS), on Thursday reported its weakest revenue growth since the start of FY21 for the April-June quarter, as global macroeconomic uncertainty, geopolitical tensions, and the winding down of the BSNL deal weighed on its top line. Revenue for the quarter declined 1.6% sequentially to Rs 63,437 crore, missing Bloomberg’s consensus estimate of Rs 64,655 crore and marking a 3% drop on a constant currency basis.
The US-listed shares (ADRs) of Infosys and Wipro were trading at with losses in the pre-market trading after TCS’ results.
TCS CEO K Krithivasan attributed the tepid growth to a combination of external headwinds and internal transitions. “We had spoken about delays in decision-making when projects start with respect to discretionary investments. This trend has continued and intensified to some extent in this quarter as global businesses were disrupted due to conflicts, economic uncertainty and supply chain issues,” he said at the post-earnings briefing.
Despite the top-line softness, the company delivered a better-than-expected net profit of Rs 12,760 crore, up 4.4% sequentially and above Bloomberg’s estimate of Rs 12,253 crore. The profit was boosted by one-off income tax interest gains and reduced expenses related to software licences and equipment, linked to the BSNL wind-down. Operating margin rose by 30 basis points to 24.5%, supported by strong cost control and delivery efficiencies.
On the revenue front, a significant drag came from the domestic market, where revenue declined a steep 32.6% quarter-on-quarter, primarily due to the completion and winding down of a large transformation project for BSNL. Overall, North America showed flat growth at 0.1%, while the UK and Europe declined 0.3% and 3.1% respectively. Among new growth markets, Asia-Pacific was flat, and the Middle East, Africa, and Latin America all saw sequential declines.
Vertical-wise, the pain was broad-based. BFSI declined by 0.5%, consumer business by 2.2%, life sciences and healthcare by 1.2%, and communications media by 3.1%. Engineering and R&D services fell by 0.6%, while technology and services grew 1.1%, and manufacturing inched up by 0.2%.
“We continued our investments in long-term sustainable growth this quarter. We stayed agile and adapted to the dynamic environment, delivering steady margins,” said CFO Samir Seksaria. “Our industry-leading profitability alongside robust cash conversion positions us well to make strategic investments for the future.”
Total contract value (TCV) for the quarter stood at $9.4 billion, down from $12.2 billion in the previous quarter but in line with analyst expectations of $8–9 billion. The company said it witnessed “robust deal closures,” especially in newer service lines, despite broader demand softness.
The company also declared an interim dividend of Rs 11 per share, with a record date of July 16 and a payout scheduled for August 4. TCS added 6,071 employees during the quarter, taking its total headcount to 6,13,069. Attrition ticked up slightly to 13.8% from 13.3% in the previous quarter.
Amid the uncertain demand landscape, TCS remains focused on emerging technologies, particularly artificial intelligence. “Across industries, clients are increasingly shifting their focus from a use-case-based approach to ROI-led scaling of AI,” said Aarthi Subramanian, executive director and COO. “We are investing across the AI ecosystem including infrastructure, data platform solutions, AI agents and business applications,” she said, adding that TCS is already deploying agentic AI in verticals such as BFSI and manufacturing.
The company’s top leadership remains cautiously optimistic. “We are confident and optimistic of international revenues growing in the coming quarters as more clarity comes in,” Krithivasan said.
On Thursday, TCS shares closed 0.4% higher at Rs 3,397.10 ahead of the earnings release. However, the stock remains down over 17% year-to-date, reflecting broader concerns around the outlook for It firms in a globally uncertain environment.